
19 01 



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JK 791 

.ns 

1907 
Copy 2 



United States 
Civil Service Retirement Association, 
Washington, D. C. August 9, 1907. 
The accompanying draft of a pr®p;^j|ed bill for the retirement 
of civil service employees, which was drafted by the Sub-Com- 
mittee on Personnel of the Committee on Department Methods, 
and report with which such draft was submitted to the whole 
committee, are printed and distributed for the information of 
those interested in the subject thereof. 

Pickens NeageE, 

President. 



U^Y 1- 



17 1513 



Ki'^ 



AS" 



!1-^ 
^T^ 



A BILL 

For the Retirement of Employees in the Classifie,d Civil Service 
of the Government. 

Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That begin- 
ning with the first day of July next following the passage of this 
Act there shall be deducted and withheld from the monthly salary, 
pay or compensation of every officer or employee of the United 
States to whom this Act applies, an amount which will be suffi- 
cient, with interest thereon at four per cent per annum com- 
pounded annually, to purchase from the United States under the 
provisions of this Act, an annuity for every such employee on 
arrival at the age of retirement as hereinafter provided, equal 
to one and one-half per cent of his annual salary, pay or com- 
pensation for every full year of service, or major fraction thereof, 
between the date of the passage of this Act and the arrival of 
the employee at the age of retirement. The annuity hereby pro- 
vided shall be based on such annuity table as the Secretary of 
the Treasury may direct, and interest at the rate of four per 
cent per annum. 

Sec. 2. That the amounts so deducted and withheld from the 
salary, pay or compensation of each employee shall be deposited 
in the Treasury of the United States and shall be credited, to- 
gether with interest at four per cent per annum compounded an- 
nually, to an account of the employee from whose salary, pay or 
compensation the deduction is made, and the moneys so deducted, 
together with the interest added thereto, shall be held and used 
by the United States until paid out as herein provided. The 
interest hereby provided shall be paid out of any money in the 
Treasury not otherwise appropriated. 

Sec. 3. That upon retiring at the age of retirement the em- 
ployee may withdraw his savings with the increment of interest 
as herein provided, under one of the following options : 

Option I. In one sum. 

Option 11. In an annuity payable quarterly throughout life. 

Option III. In an annuity payable quarterly throughout life, 
with the provision that in case of the death of the annuitant 
before he has received in annuities the amount of his savings, 
plus the interest credited thereon, the balance shall be paid to his 



estate. In determining, at his death, the amount due to his 
estate no account shall be taken of the annuities paid to him by 
the United States, as hereinafter provided. 

Option IV. In an annuity certain for a limited term of years, 
payable quarterly. 

If after retirement the employee does not avail himself of 
one of the foregoing options, but leaves the amount due him 
on deposit, interest at the rate of two per cent per annum on 
the original sum so left on deposit on retirement, shall be credited 
thereto for a period not exceeding twenty years, and if not then 
withdrawn the money so left on deposit and the interest credited 
thereon shall be covered into the Treasury as a miscellaneous 
receipt. 

Sec. 4. That upon absolute separation from the civil service 
prior to the retirement age, and only upon such separation, the 
employee may withdraw his savings with the increment of in- 
terest credited thereon in one sum, or, in case his savings amount 
to at least one thousand dollars, and he has been in the service 
not less than twenty years, he may withdraw the same under 
any one of the foregoing options computed on the basis of his 
attained age. In case of the death of an employee while in the 
service, the amount of his savings together with the interest 
credited thereon shall be paid to his estate. 

Se;c. 5. That in case of reinstatement in the classified civil ser- 
vice of any person who at the time of his separation therefrom 
received a refund under Section 4 of this Act, his period of ser- 
vice for the purpose of retirement and of making the monthly 
deduction from his salary shall be computed from the date of 
such reinstatement, unless he shall within ninety days after re- 
instatement pay to the Secretary of the Treasury the amount re- 
funded to him, in which case the same shall be replaced to the 
credit of his account, and the former period of service shall also 
be counted. 

Sec. 6. The retirement age herein referred to, shall be sixty 
years for Group i, sixty-five years for Group 2, and seventy 
years for Group 3. And the President of the United States shall 
designate the branches of the service to be included in each group. 

Sec. 7. That every employee to whom this Act applies shall 
be entitled on reaching the retirement age to retire from the ser- 
vice under the provisions hereinbefore contained, and also in 
addition to the annuity therein provided for, to receive from the 
United States during the remainder of his life an annuity equal 
to one per cent for Group i, one and one- fourth per cent for 
Group 2, and one and one-half per cent for Group 3, of his 
average salary, pay or compensation during the last ten years 
of service, for every year that he shall have been in the service 
prior to the passage of this Act, and the Secretary of the Treas- 
ury is hereby authorized and directed to pay such annuity 



quarterly from any money in the Treasury not otherwise appro- 
priated, upon proper certification of the retirement of such em- 
ployee by the appointing officer under whom he last served. An- 
nuities from the United States for the period of service prior 
to the passage of this Act shall be payable only on condition that 
the employee remains in the service until he reaches the age of 
retirement, or after having served the United States twenty 
years he is retired by reason of disability not due to vicious habits, 
or by reason of exigencies of service, but without fault or delin- 
quency on his part. 

On the death of the employee the payment of annuities pro- 
vided for by this section shall cease and determine. Annuities 
payable by the United States under this section on salaries in 
excess of twenty-five hundred dollars per annum shall be based 
upon an annual salary of twenty-five hundred dollars. 

Se;c. 8. That the period of service upon which the annuity to 
be paid by the United States is based, shall be computed from 
original employment, whether as a classified or unclassified em- 
ployee, and may include service in one or more departments, 
branches or independent offices of the Government, and periods 
of service at different times. 

Se:c. 9. That none of the moneys mentioned in this Act shall 
be assignable either in law or equity or be subject to execution 
or levy by attachment, garnishment, or other legal process. 

Se;c. 10. The Secretary of the Treasury shall prepare and 
keep all needful tables, records and accounts required for carry- 
ing out the provisions of this Act. The records to be kept shall 
include data showing the mortality experience of the employees 
in the various branches of the service and in different localities 
throughout the country, and the rate of withdrawal from the 
classified service, and any other similar information that may be 
of value and may serve as a guide for future valuations and 
adjustments of the plan for the retirement of employees. 

SiSC. II. Within thirty days after the arrival of an employee at 
the age of retirement, the head of the Department or Independent 
Office in which he is employed shall certify to the Secretary of the 
Treasury regarding the efficiency of such employee, with state- 
ment as to whether the public interest requires the continuance 
of such employee in the service, or his retirement, and such 
certificate and statement shall be conclusive. If by reason of 
the efficiency of an employee who has reached the retirement age, 
and is willing to remain in the service, his continuance therein 
would be in the opinion of the head of the Department or proper 
appointing officer advantageous to the public service, such em- 
ployee may be retained for a term not exceeding two years ; and 
at the end of the two years, he may by similar certification be 
continued for an additional term of two years, and so on. Upon 
the failure of the head of the Department or proper appointing 



officer to make the above described certificate, it shall be the duty 
of the Secretary of the Treasury to place such employee upon 
the retired list in accordance with the provisions of this Act. 

Se;c. 12. The provisions of this Act shall apply only to the 
Classified Civil Service, which is hereby defined to include all 
officers and employees in the Executive Civil Service of the 
United States, except persons appointed by the President and 
confirmed by the Senate, and mere unskilled laborers. No per- 
son serving in a position excepted from examination as defined 
in the Civil Service rules shall be included within the provisions 
of this Act unless he has served in a competitive position for at 
least one year. Whenever any person becomes separated from 
the classified service by reason of appointment in the unclassified 
service, such separation shall not operate to take him out of the 
provisions of this Act. The President shall have power, in his 
discretion, to exclude from the operations of this Act, any 
groups of employees whose tenure of office is necessarily inter- 
mittent or of uncertain duration. 

Skc 13. For the purpose of paying for clerical and other work 
and expenses necessary in carrying out the provisions of this Act. 
during the fiscal year 190 , including salaries and rent in the 
city of Washington, there is hereby appropriated the sum of 
Fifty Thousand Dollars, and for all payments authorized by this 
Act the necessary moneys are hereby appropriated, out of any 
moneys in the Treasury not otherwise appropriated. 

Sec. 14. That the Secretary of the Treasury is hereby au- 
thorized to perform or cause to be performed any and all acts, 
and to make such rules and regulations as may be necessary and 
proper, for the purpose of carrying the provisions of this Act 
into full force and effect. 



Washington, June 21, 1907. 
The Committee on Departm^ent Methods. 

Gentlemen : 

Your Sub-Committee on Personnel has the honor to submit 
the following report on the question of superannuation. 

Suitable provision for the retirement of aged civil employees 
of the Government is desirable on two grounds : 

(i) As a means of improving the public service, since the 
Government necessarily suffers considerable loss through the 
progressive inefficiency of aged employees. 

(2) As an act of justice to faithful employees, whose salaries 
are seldom sufficient to enable them to lay aside anything for old 
age, especially in Washington where the expenses of living are 
now out of all proportion to their compensation. The average 
salary paid by the Government is $1,072, according to Census 
Bulletin No. 12. 

Many efforts have been made to devise a measure which would 
afford the necessary relief at once to the service and the em- 
ployees, and scores of bills on the subject have been introduced 
in Congress. None has succeeded because each and every one 
shows on analysis that it is unfair either to the employees or the 
tax-payer, or else that it discriminates unjustly between different 
classes of employees. 

The bills that have been presented may be divided into two 
classes : 

(i) Those proposing that annuities be paid out of the Federal 
Treasury. 

(2) Those providing for a uniform deduction of a given per 
cent from all salaries, for the creation of a general fund from 
which all employees, on retiring at the age of 70, shall receive 
annuities, payments to begin a certain number of years from 
the passage of the bill. 

These bills generally provide that an employee must serve 
for at least ten years before he may be entitled to an annuity 
on retirement. Some provide for a uniform deduction of a 
given per cent from all pay, and the payment of annuities based 
on length of service. In view of the public sentiment against 
a civil pension list, bills of the first class are not here discussed. 
Those of the second class are open to the serious objection that 
they are unjust to the younger employees, since they require 
them to set aside a much larger per cent of their salaries in order 
to create a fund for the older men than would be necessary to 



provide annuities for themselves alone. The defect in all such 
plans is apparent to every student of the subject, and is very 
clearly explained in the report of the National Civil Service 
Reform League above referred to, as follows : 

"In general, any plan of uniform, or 'flat rate' assessment, to 
begin practically at once to take care of the aged, is a great 
injustice to the younger employees. The old will receive sup- 
port after they have paid but a few years, and can pay but a few 
years more, even if assessments are continued on the retirement 
receipts. The young will have to pay a much larger sum from 
their salaries than would be required, for their old age alone. 
If, by any chance, the fund should prove to be too small, that 
would transpire only many years hence, when those now aged 
would have received their full allowances and passed from the 
stage. The others, the present younger employees, who would 
have borne the great brunt of expensive assessments, would thus 
be the ones to suffer, unless the Government made up the de- 
ficiency. 



This argument is sound. It follows then that any plan for 
the retirement of superannuated civil service employees for which 
the approval of employees themselves and the public alike is de- 
sired, should contain the following provisions : 

(i) The funds necessary for the payment of the annuities 
should be furnished by the employees themselves without ex- 
pense to the Government, other than the payment by the Gov- 
ernment of a reasonable rate of interest on the money held by it, 
and the payment of salaries to the clerical force required to keep 
the accounts and distribute the funds ; 

(2) Each employee should contribute the amount necessary 
to create his own annuity, without regard to payments by others, 
so that each employee may receive full return on the money 
contributed by him ; 

(3) The annuities to be paid employees on retirement should 
be graduated according to length of service, and in such manner 
that the monthly contributions required from employees for the 
creation of such annuities shall be in no case excessive. 

The plan recommended ultimately meets these conditions. It 
is founded on well-established principles, but they are applied in 
a new way. 

The general idea is that each individual shall provide the 
necessary fund for his own retirement. In presenting the plan 
it is well to divide the exposition into two parts : The first part 
makes provision for those whose service begins after the enact- 
ment of the law. The second part makes provision for those who 
are in the civil service at the time of the passage of the law. 

It is proposed to pay every employee in the civil service on 



arriving at the age of 70 years an annuity equal to 1.5 per cent of 
his pay for every year of service. For the purpose of iUustra- 
tion, assume that an employee entered the service at 20 years of 
age, and received a salary of $1,200 per annum through 50 years, 
when he reached the retiring age of 70. One and one-half per 
cent of $1,200 is $18. This amount ($18) multipHed by his years 
of service (50) gives $900, which would be the amount of his 
annuity for the remainder of his life. In actual practice, the 
employee's compensation is usually increased from time to time, 
or may be reduced, but this does not interfere with the operation 
of the plan, for the deductions from his salary are increased or 
diminished in such amount that the annuity upon retirement will 
still be 1.5 per cent of his salary for each year of service, regard- 
less of changes in salary or when they are made. This is a 
simple calculation, easily understood, and is further simplified 
by reducing the deductions from various salaries to a set of 
tables. 

In order to provide the fund from which to pay the proposed 
annuity of 1.5 per cent of the employee's salary for each year 
of service, a deduction should be made from the monthly salary 
of the employee, which will be sufificient, with interest at four 
per cent, to purchase such annuity on arrival of the employee at 
the age of 70. This sounds complex when stated in the abstract, 
but in practice the operation is simple. In the above illustration 
it was found that the annuity to be provided for at 70 was $900 
per year for the remainder of the employee's life. The next step 
is to ascertain the cost of an annuity of $900 for life beginning 
at the age of 70. The cost of an annuity is based on the probable 
length of life from a given age, and interest at a given rate on 
the purchase price. The amount charged by insurance companies 
for an annuity of $100 on the non-participating plan, beginning 
at 70, is $742. Therefore, the annuity of $900 desired in this 
illustration would cost 9 times $742, or $6,678. The cost of 
this annuity being ascertained, the next step is to determine what 
sum must be set aside monthly to accumulate, with four per cent 
interest, $6,678 during the employee's 50 years of service from 
20 to 70. By reference to an interest table it will be seen that 
a deposit of $1 per month for 50 years, with interest com- 
pounded annually at four per cent, amounts to $1,871.48. The 
number of dollars per month that would be necessary to accumu- 
late $6,678 is ascertained by dividing $6,678 by $1,871.48. This 
gives $3.57 as the amount to be deducted from a salary of $100 
per month for a service of 50 years, in order to accumulate 
$6,678, which is sufficient to purchase an annuity of $900 per 
annum beginning at the age of 70 years. The amounts deducted 
from salaries will vary with the age of entering the service, and 
with the amount of the salary. Deductions do not increase with 
age, but only with the increase of salary. They will in no sense 



be an "assessment," unjustly burdening the younger employees 
for the benefit of the older. Instead, they are sums set aside 
as savings in the United States Treasury by each individual 
employee for his own ultimate benefit, or that of his family, 
and with the knowledge that under the operation of compound 
interest, the total will at the age of 70 years be sufficient to pur- 
chase a reasonable annuity. He will in no way contribute to the 
retirement of other employees, nor will the savings of other 
employees be diverted to his use. 

A man entering the service, aged 45 years, at $100 a mxonth, 
would have to put aside $6.53 a month in order to accumulate 
at four per cent compound interest, $3,339, which is the cost of 
an annuity of $450 a year beginning at the age of 70. It will 
be observed that this annuity is also 1.5 per cent of his pay 
for each year of service, the length of service in this case having 
been 25 years. 

These illustrations show that the annuity accruing to' the 
benefit of the employee who gives many years of his life to the 
Government service is proportionately larger than that accumu- 
lated by the one who comes in at the same salary but too late 
in life to render long service. 

The plan contemplates four methods of settlement for the em- 
ployee on arrival at the age of retirement. He may convert his 
savings with the increment of interest into one of the following 
options : 

(i) One cash sum. 

(2) An annuity payable throughout life. 

(3) An annuity payable throughout life, with the provision 
that in case of death of the annuitant before he has received in 
annuities the amount of his savings with interest, the balance 
shall be paid to his estate. 

(4) An annuity for a limited term of years. 

These options are advisable, because the circumstances of 
employees vary so greatly that a settlement which would be de- 
sirable for one might not be wise for another. 

But a further alternative is given. A man need not necessarly 
convert his fund immediately upon retirement ; but may leave it 
on deposit after separation from the service at any age, bearing 
interest at the rate of two per cent per annum for a period not 
exceeding twenty years. If not withdrawn within that time the 
money so left on deposit will be covered into the Treasury as a 
miscellaneous receipt. 

It is not merely the employee that remains in the service until 
he reaches the age of retirement who will benefit by this plan. 
A person separated from the service in any manner before that 
age will have to his credit a sum of money which he will be free 
to withdraw. If it amounts to $1,000, and he has been in the 
service not less than 20 years, he may withdraw it under any 

10 



one of the foregoing options at his attained age. In case of his 
death in the service, the amount of his savings with interest will 
be paid to his estate. 

The argument that "any retirement scheme which provides 
for refunds is objectionable, because it puts a cash premium 
upon resignation," is predicated upon the theory of the flat as- 
sessment of 5 per cent, or some such rate, upon all salaries, and 
has no applicability to the plan of accumulated individual savings 
here described. 

This brings out another advantage to the service. Under 
present conditions sentiments ©f humanity make the civil service 
rules difficult of enforcement in many cases. It is not the super- 
annuated only who become inefficient. A rigid enforcement of 
rules would result in the elimination of many from the service, 
who are retained because they would be penniless save for their 
monthly stipend. 

On the other hand, a provision for retirement would un- 
doubtedly be an additional hold on many of the Government's 
most valuable men. There are men of attainment, especially in 
scientific lines, who would like to work for the Government if 
they could afford to. The universities tempt them away, how- 
ever, not merely with offers of larger salaries, but with the 
promise of some provision for old age. A university professor 
may possibly be a beneficiary of two retirement funds, that es- 
tablished by the university itself and that founded by Mr. Car- 
negie, whereas a Government official has no such prospect. 

Still another way in which the personnel of the service would 
undoubtedly be improved is through the retirement, under these 
conditions, of many employees before the age of 70. They 
would prefer to accept less annuity and be relieved from the 
cares of office at an earlier day, and in many cases the service 
would be improved by their retirement. 

It is also provided that when an employee has received a re- 
fund on retirement and is afterward reinstated, his period of 
service shall be computed from the date of such reinstatement, 
unless he shall repay within 90 days the amount which he with- 
drew on retiring, in which case the former period of service 
shall also be counted. It may not always be desirable to retire 
employees at the age of 70. Their services may be of great value 
to the Nation and they themselves may be averse to retiring. 
Therefore, the arbitrary retirement of all who have reached the 
age of 70 is not contemplated, but provision is made for con- 
sidering the cases of those who are competent and who wish to 
remain in the service after that age. 

This finishes the first part of the plan, the basis on which all 
Government employees will be retired after about 50 years, when 
practically all now in office will have passed away. If this were 
all it would be open to criticism as unjust to the older employees, 

11 



who are too advanced in years to provide funds for their own 
retirement. 

If aged employees are entitled to any assistance at all in con- 
sideration of their past services, or if the services would be im- 
proved by their retirement, the Government should provide the 
funds for their annuities. Proceeding on this premise, a scheme 
is proposed which contemplates the treatment of all employees 
alike that are now in the classified service, in proportion to their 
years of service, by giving every employee, at Government ex- 
pense, an annuity, on arrival at the age of 70, equal to 1.5 per 
cent of his average salary during the last ten years of service, 
for every year of service up to the enactment of this retirement 
measure, provided he remains in the service until he reaches that 
age. 

To illustrate : An employee now 70 years of age, who had 
been in the service 50 years, would be entitled to retire at once 
on an annuity equal to 1.5 per cent of his average pay during the 
last ten years of service multiplied by his total years of service^ 
or 75 per cent of such average pay. 

An employee 40 years of age, who has been in the service 15 
years at the time of the enactment of this plan into law would 
on retirement 30 years hence, be entitled to receive an annuity 
from the Government of 1.5 per cent of his pay for each year 
of service up to the passage of such a law, or 22.5 per cent, plus 
the amount of his own savings from the time the law went into 
effect until his retirement, after 30 years, at the age of 70. Sup- 
pose that this employee receive a salary of $1,200 per annum 
throughout the whole term of his service. On retiring at the 
age of 70, he would be entitled to an annuity of $810 for the 
remainder of his life, $270 from the Government, as 1.5 per 
cent of his salary for the fifteen years he served prior to the 
passage of the retirement law, and $540 as the annuity from his 
own savings, that is, 1.5 per cent of his salary for every year 
of service after the passage of the law. The annuity from the 
Government (the $270) would have no cash surrender value. 
It could be taken only as an annuity — never in a lump sum — 
and could be obtained in case the employee remained in the ser- 
vice until he reached the age of 70. The $540 on tlje other 
hand, which represents his own savings, plus interest, could be 
converted into the cash sum necessary to buy that annuity 
($4,007). He can always, on leaving the service, withdraw his 
own money, but the contribution by the Government for services 
rendered prior to the passage of this act must always be taken 
in the form of an annuity. None of these funds, whether the 
savings of the employee or the contribution of the Government, 
should be subject to attachment or any other legal process. 

It is not contemplated that the Government annuities payable 
under the second part of this plan shall be based on salaries 

12 



above $2,500 per annum. All salaries above that sum shall be 
reckoned as salaries of $2,500. The amount deducted henceforth 
from each salary to accumulate each employee's own retirement 
fund, would, however, be based on the full amount of his salary. 

In view of the more strenuous demands made on their physical 
strength, it is proper to make the Government annuities due rail- 
way postal clerks for previous service, available at the age of 
60 rather than 70. It is also proposed to make the Government 
annuities due letter carriers available at the age of 65 rather than 
70. The annuities paid in these cases would be relatively smaller 
than those given other employees at 70. Similar treatment will 
also be granted to other classes of employees whose work makes 
the earlier ages of retirement desirable. 

The plan provides that the period of service upon which the 
annuity to be paid by the Government is based shall be com- 
puted from the original employment, whether as a classified or 
unclassified employee. This may include service in one or more 
departments of the Government, and periods of service at differ- 
ent times. 

The question naturally arises, how much will the adoption of 
this plan cost the Government? From the time of the passage 
of such a law all employees would begin to provide for them- 
selves, so that ultimately the plan would be no expense to the 
Government beyond the payment of salaries to the necessary 
clerical force to handle the accounts, and the payment of inter- 
est for the use of the funds. In the meantime, however, the 
Government would have to take care of the old employees as 
they reach retiring age, for services rendered prior to the adop- 
tion of the plan, until about 50 years from now when the last 
one would have been paid off. The sum required to do this 
annually would gradually increase for a few years, reaching its 
maximum about 30 years after the passage of the law. From 
the twenty-fifth to the thirty-second year after the adoption of 
the plan the amount each year is about the same. After the 
thirty-third year the amount each year drops off very rapidly 
until in 50 years the plan would be self-sustaining, and there 
would be no more need of making appropriations for the super- 
annuated. 

In 1904 the Bureau of the Census made a report on the execu- 
tive departments which is the latest authoritative information 
that we have regarding the personnel of the civil service. It is 
known as Bulletin 12, and covers the service as of July i, 1903. 
In order to ascertain definitely the maximum amount of money 
that the Government would have to pay during the next 50 years 
or so, if this plan of retirement should be adopted, tables, based 
on Bulletin 12, were prepared for all ages at which people are 
employed in the classified civil service, showing the annuities 
payable the year of the adoption of the plan and each year there- 

13 



after until all present employees are dead, and their sum total, 
or what it would cost the Government to put the plan in opera- 
tion and carry it through to completion as follows : 

Maximum amount of annual appropriation by the Federal 
Government necessary to provide a monthly annuity to each per- 
son in its Classified Civil Service July i, 1903, upon attaining 
the retirement age of 70 years. The amount of annuity to be 1.5 
per cent of the employee's salary July i, 1903, for each year of 
service completed prior to that date. 





Amount of 




Amount of 


Amount of 


Year. 


Appropriation. 


Year. 


Appropriation. 


Year.' Appropriation. 


1907 


$725,110 


1929 


$1,617,302 


1952 


$572,770 


1908 


811,840 


1930 


1,663,981 


1953 


484,069 


1909 


908,188 


1931 


1,699,374 


1954 


403,305 


1910 


1.025,293 


1932 


1,713,035 


1955 


331,677 


1911 


1,157,181 


1933 


1,724,385 


1956 


269,380 


1912 


1,258,725 


1934 


1,734,603 


1957 


216,046 


1913 


1,370.710 


1935 


1,736,047 


1958 


170,947 


1914 


1 ,466,424 


1936 


1,744,512 


1959 


133,347 


1915 


1,526,551 


1937 


1,746,561 


i960 


102,450 


1916 


1,570,768 


1938 


1,736,974 


1961 


77,434 


1917 


1,579,132 


1939 


1,718,542 


1962 


57,499 


1918 


1,564,974 


1940 


1,684,723 


1963 


41,884 


1919 


1,550,742 


1941 


1,635,423 


1964 


29,877 


1920 


1,534,636 


1942 


1,568,188 


1965 


20,829 


1921 


1,531,851 


1943 


1,492,830 


1966 


14,152 


1922 


1,512,159 


1944 


1,406,199 


1967 


9,354 


1923 


1,554,679 


1945 


1,314,000 


1968 


5,971 


1924 


1,546,866 


1946 


1,211,839 


1969 


3,697 


1925 


1,550,718 


1947 


1,103,182 


1970 


2,199 


1926 


1,555,588 


1948 


990,583 


1971 


1,251 


1927 


1,571,682 


1949 


889,324 


1972 


679 


1928 


1,589,167 


1950 


772,735 


1973 


346 






1951 


669,126 


1974 


163 



It should not be forgotten that this is a maximum cost, and 
that the real cost will probably be greatly less, since many em- 
ployees who enter into this computation will leave the service 
before reaching the age of 70. Compare this maximum cost of 
considerably less than two millions of dollars annually for a term 
of forty years with that of any other plan ever proposed, and it 
will be seen how little is asked of the Government. 

Having explained the plan proposed, it is interesting to turn 
to the conclusions set forth in the very careful report of the 
National Civil Service Reform League mentioned above. They 
are stated in the following paragraph: 

14 



"We therefore recommend that, if any enforced provision for 
superannuation be deemed advisable, it take the Australian form 
of a deferred annuity policy, which candidates for office should 
be required to take out in some company before final appoint- 
ment. As this would not apply to those who are at present in 
the service, we recommend that a record be kept of the amount 
of work done by employees over sixty-five years of age, and 
that their salary be reduced in proportion to the amount by which 
their work falls short of that of a thoroughly efficient employee. 
This would be at once fair to the Government, and humane to 
the office-holder." 

This shows that while their reasoning is good as far as it goes, 
the members of the Committee of the National Civil Service 
Reform League have not gone far enough. They have con- 
sidered civil pension systems and uniform assessment systems 
as the only possibilities. The plan here proposed, which is 
neither, brings to the employee and the Government all the 
benefits which might result from compulsory insurance in some 
m.utual insurance company, as suggested by the above-mentioned 
committee, and it has in addition one great advantage ; it avoids 
forcing employees to purchase annuities from insurance com- 
panies under arbitrary conditions, and at prices that might be 
extortionate. 

In this connection it is interesting to note that one of the 
valuable features of the plan is the array of reliable statistics 
concerning a large body of representative people, that will grad- 
ually be collected if this retirement plan is adopted. In handling 
the accounts of the employees under this plan, records will neces- 
sarily be kept showing the mortality experience of the employees 
in the various branches of the service and in different localities 
throughout the country, the rate of v/ithdrawal from the classi- 
fied civil service, and much similar information that may be of 
value and service as a guide in future valuations and adjustments 
of any retirement plan, and in reducing the cost not only to the 
employees but to the Government as well. The records will 
eventually become of great interest to every individual in the 
United States who contemplates taking out a life insurance policy, 
for the Government experience will prove conclusively whether 
the rates charged by insurance companies are reasonable. At 
present it is impossible to say absolutely. They are usually 
based on a table known as the American Experience Table of 
Mortality, compiled by the Mutual Life Insurance Company of 
New York, which was made up from observation of about 60,000 
selected lives. The proposed retirement plan for Government 
employees will secure a record of at least twice that many lives 
at once, and probably three times that number before long, under 
various but classified conditions. The value of such an authori- 



15 



tative record would in itself justify the expenditure of the mod- 
erate sum necessary for the conduct of such an ofHce. 

In conclusion, we beg leave to say that your Committee has 
taken pains not only to study the details of this plan, as well as 
many others, but to submit it to the examination of recognized 
actuaries, Messrs. Hiram Messenger and Benedict D. Flynn of 
The Travelers Insurance Company of Hartford, and to have the 
necessary computations made so that nothing may be left to the 
imagination. The details have been thoroughly worked out, and 
are embodied in the accompanying bill, in proper form for sub- 
mission to Congress. 

Very respectfully, 

A. P. Davis, Chairman; 

Chari.e;s Lyman, 

Treasury Department ; 

John C. ScofieivD, 

War Department ; 

Bayard Wyman, 

Postoffice Department; 

J. W. HOLCOMBE, 

Interior Department; 

A. Zappone, 

Department of Agriculture; 

Georges W. Leadeey, 

Department of Commerce and Labor; 

George R. Waees, 

Civil Service Commission. 



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